Baker, Ahles & Kaskovich

Lower gas prices can only help GM Arlington plant already working overtime

GM worker Yolanda Twine talks with CBS News correspondent Manuel Bojorquez at the Arlington assembly plant.
GM worker Yolanda Twine talks with CBS News correspondent Manuel Bojorquez at the Arlington assembly plant. Courtesy of CBS

GM’s Arlington assembly plant, where workers have been working around the clock for months to keep up with strong demand for big SUVs, was featured Tuesday in a CBS Evening News report on the impact of falling oil prices.

Plant manager Paul Graham told CBS correspondent Manuel Bojorquez that the plant has been running on three shifts, 24 hours a day, and has added overtime on some Saturdays to meet demand for Cadillac Escalades and Chevrolet Suburbans and Tahoes.

And that was before gasoline prices started plummeting. The big SUVs aren’t known for their gas mileage, so the lower prices at the pump should make them attractive to more buyers.

Will lower oil prices help the plant, Graham was asked? “It’s hard to project, but it can’t hurt, right?” he responded.

CBS reported that deliveries to dealerships from the Arlington plant are up 75 percent over last year. That’s partly due to the $530 million expansion and overhaul of the 60-year-old plant, which added a stamping plant and 1,000 jobs.

Plant worker Yolanda Twine said she plans to save the extra money she’s making on overtime. In a CBS news poll, 69 percent of Americans said they plan to pay bills and expenses with money they’re saving on lower gas prices.

GameStop’s refurb center called “secret weapon”

Fortune magazine recently paid a visit to GameStop’s sprawling Refurbishment Operations Center off William D. Tate Avenue in Grapevine and was apparently impressed.

Introducing an interview with GameStop CFO Rob Lloyd posted online at Fortune.com, the business magazine called the facility — where the consumer electronics retailer repairs and repackages used video games, consoles, iPhones and iPods for resale at its 4,000 U.S. stores — the company’s “secret weapon” in fending off Wal-Mart’s recent incursion into used video games.

“The profit margins on pre-owned items are in the 42-48 percent range — compared to about 29 percent overall for the retailer — so the business is key to GameStop,” wrote Fortune’s Phil Wahba.

GameStop pioneered the used video game business and decided early on to keep refurbishment in house so it could control quality.

Said Lloyd: “You have to be able to refurbish the goods because 15 percent, maybe 20 percent, of what you get in trade in a store needs to be buffed if it’s a disc, or repaired if it’s a hardware system. To not do that, or hand that to a third party means you are giving away a big chunk of that margin that’s important to the business. The refurb center is also one of those barriers to [others’] success.”

Competitors often come into the business with a lot of fanfare, but GameStop has held onto its customers, Lloyd said. “It hasn’t made a dent in our business.”

We toured the 182,000-square-foot facility in August, where 1,200 workers on two shifts handle 250,000 used video games and 5,000 smartphones a week. Used equipment sales generate more than a quarter of GameStop’s revenue and about half its gross profit.

Sandra Baker, 817-390-7727

Twitter: @SandraBakerFWST

Steve Kaskovich, 817-390-7773

Twitter: @stevekasko

Barry Shlachter, 817-390-7718

Twitter: @bshlachter

  Comments